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Noble Vs. SDY: A Deeper Dive Into 2 Dividend Aristocrat ETFs

Published Thu, 19 Jan 2017 16:21:53 -0500 on Seeking Alpha

Income investors are no doubt aware of the Dividend Aristocrats and the benefits that come from investing in them. Aristocrats have historically beaten the S&P 500 (NYSEARCA: SPY) over the long term, by several percent a year over the past 10 years, while doing so with less risk.
Two of the biggest ETFs targeting the Dividend Aristocrats are the ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) and the SPDR S&P Dividend ETF (NYSEARCA: SDY). These two funds account for nearly $20 billion in investor money and both have rewarded shareholders with 5-star performance. Despite their similarities and high correlations to each other, there is enough differentiation between the two that investors shouldn't automatically assume that the two are interchangeable. In this article, I'm going to examine these two funds to see if either carries an advantage over the other.
Benchmarks
The first major difference in the two funds is the investable universe they utilize.
The S&P 500 Dividend Aristocrats ETF, as the name suggests, uses the S&P 500 as its basis and targets the index's components that have increased their dividends annually for at least the past 25 years. The benchmark will include a minimum of 40 names and be equal weighted with no individual sector comprising more than 30% of the fund's assets. As of the end of 2016, the fund had 50 names in the portfolio.
The S&P Dividend ETF casts a wider net. Its benchmark, the S&P... Read more